A party wrongfully removed from a partnership can seek arbitration under the Arbitration and Conciliation Act, 1996.

Order on Board

27.01.2025

1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator.

2. The facts, in brief, as projected by the applicant are that the applicant happens to be the joint owner and operator of M/s Ayesha Cold Storage along with the respondent Nos. 1, 2 and 3. The Cold Storage was jointly operated by all the partners and all the profit was shared by all of the parties proportionately. The said property is situated in village Chittod, District – Balod, Chhattisgarh. The parties mentioned above entered into a partnership agreement dated 18.07.2012 for the purpose of operating M/s Ayasha Cold Storage. The said firm was engaged in providing storage facilities to the Agro, Forestry, Horticulture, fertilizers, pesticides, agency- based industries and merchants. In the partnership deed, the parties had also mentioned the remuneration which was to be drawn by each of the partners. The partnership deed also mentioned in the terms of the agreement, any party desirous of retiring from the partnership shall have to give an advance notice of three months in writing to the other parties. Subsequently, when the applicant went to the Dhamtari Branch of the United Bank of India on 15.10.2019 for inquiring about the statement of accounts of the said cold storage from the year 2012-13 to 2019-20, to the utter shock and dismay of the applicant, he was informed that he cannot be provided with the statement of accounts of the said cold storage as he was no longer a partner of the said firm as per an alleged amendment to the deed of partnership dated 30.08.2016, the applicant has been removed as a partner from the said firm on account of an alleged resignation submitted by the applicant as per which, without any substantial reason, he has wished to retire from 22.08.2016. It is submitted that the signatures of the applicant on the said resignation is false and fabricated as the applicant has never signed any retirement/resignation letter to waive his partnership rights over M/s Ayasha Cold Storage. Also, since 2013 respondents have deprived the applicant of his share of profit or any salary as mentioned in the deed of partnership. It is evident that the entire act of fabrication has been undertaken by respondents to act in breach of the deed of partnership dated 18.07.2012. Thus, the applicant states that disputes have arisen between the parties and further repeated attempts have been made to amicably settle the disputes regarding the non-payment of amounts due to the applicant. Asserting aforesaid, the applicant approached this Hon'ble Court vide Arbitration Request No. 5/2020 which dismissed by this Hon'ble Court vide order dated 06.05.2022 thereby observing that since there being no demand being made in terms of Clause 15 of the partnership deed invoking arbitration clause, therefore liberty be granted to make a demand in accordance with law thereby invoking clause 15 of the partnership deed. Reserving the aforesaid liberty, the Hon'ble dismissed the application so preferred by the present applicant. After such liberty being reserved in favor of the applicant, the applicant invoking the same preferred a demand notice addressed to the respondent in terms of clause 15 of the partnership deed. The applicant sent the afore-stated demand notice in terms of clause 15 of the deed to the respondents through his counsel, wherein, a time bound request (within 30 days) was made to respondent to appoint an arbitrator with mutual consent and in lieu thereof requested them to suggest names of the individuals for appointment as an independent and impartial arbitrator as per the terms of the deed of partnership for resolution of disputes via mode of arbitration. The respondent in turn replied to the notice so addressed by the applicant herein, and vide the said reply dated 13.06.2022 the present respondent vehemently and out-rightly denied existence of any dispute. Pertinent it is for